SUVs, smartphones and cigarettes to cost more

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New Delhi, Feb 28: Finance minister P Chidambaram has increased excise duty on cigarettes, imported motor bikes, SUVs and mobile phones costing over Rs 2000.

In a bid to mobilise revenue, Chidambaram took the traditional route of taxing the cigarettes, cigars, sports utility vehicles (SUVs) and mobile phones.

Chidambaram said cutting expenses was important to rein in fiscal deficit but it was equally important to augment resource generation.

"Where should a finance minister look to generate resources, than cigarettes?" he asked while proposing to increase the excise duty on cigarettes to 18 percent.


He raised the duty on SUVs from 27 to 30 percent, saying "SUVs take a lot of space on the road, so the owners won't mind paying a bit more". However, SUVs registered as taxis are exempted from the duty.

On mobile phones with a price tag of more than Rs.2,000, the finance minister levied a duty of six percent. However, there is good news for ladies as far as jewellery is concerned as they will be allowed to bring more duty free gold items provided they have stayed out of India for more than year. Even branded apparels will become cheaper as there will be zero excise duty on the item.

Carpets and other textile floor coverings of coir or jute will also become less expensive as they have been fully exempted from excise duty.

Targeting the "affluent class in India that consumes imported luxury goods such as high end motor vehicles, motorcycles, yachts and similar vessels", he said: "I am sure they will not mind paying a little more." Subsequently, basic customs duty on new passenger cars and other motor vehicles (high-end cars) costing more than $ 40,000 and/or engine capacity exceeding 3,000cc for petrol run vehicles and exceeding 2500 cc for diesel run vehicles has been hiked 100 per cent from 75 per cent earlier.

Likewise, duty on yachts and similar vessels has also Likewise, duty on yachts and similar vessels has also been raised to 25 per cent from 10 per cent.

Excise duty on mobile instruments priced above Rs 2,000 has been raised to six per cent but the concessional excise duty of one per cent and has been kept unchanged in the case of low priced phones.

Eating out at air conditioned restaurants will also become more expensive with the Finance Minister bringing it under the purview of service tax. At present, service tax of 12 per cent does not apply to A/C restaurants that do not serve liquor. "The distinction is artificial, and I propose to levy service tax on all air conditioned restaurants," he said.

Homes and flats with a carpet area of 2,000 sq ft or more or of a value of Rs 1 crore will also become more expensive as the rate of abatement for this class of buildings has been reduced from 75 per cent to 70 per cent. Silk clothes made using imported raw materials will become expensive as customs duty on raw silk of all grades has been increased to 15 per cent from 5 per cent. Set top boxes will also become costlier with basic customs duty on the item has been increased 10 per cent from from 5 per cent.

However, it is not gloomy all the way with Chidambaram leaving room for some cheer as well. The duty free allowance on jewellery for an Indian passenger, who has been residing abroad for over one year or a person who is transferring residence to India, has been raised to Rs 1 lakh in case of a lady passenger from Rs 50,000 earlier. For a male passenger, this has been raised to Rs 50,000 from Rs 10,000.

Moreover, precious stones will become cheaper as the basic customs duty has been cut to 2 per cent from 10 per cent on pre-forms of precious and semi-precious stones.

Branded apparels will also become cheaper as there will be no excise duty on the item. Last year, 10 per cent excise duty was levied on 30 per cent of the maximum retail price (MRP). Imported hazel nuts will also become cheaper as the customs duty has been reduced to 10 per cent from 30 per cent.

Similarly, dehulled oat grain will also be less expensive as customs duty has been cut to 15 per cent from 30 per cent earlier.

The list of what goes up and what goes down:

What goes up What goes down
 Cigarettes  Jewellery
 Cigars  Branded garments
 Mobile phones  Agricultural testing procedures
 Imported luxury cars  Ships and vessels
 High-end motor vehicles  Cinema and films
 SUVs  Machinery for manufacturing of leather goods
 Marbles  Dehulled oat grain
 Silver  Precious and semi-precious stones
 Set-top boxes  Imported hazel nuts
 Dining in air conditioned restaurant
 Yachts and similar vessels

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